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Interliant Upgrades ASP Portfolio

As a part of the deal, Microsoft (MSFT) made a $10 million stock investment in Interliant (INIT).

The two companies plan to work together to develop tools for independent software vendors (ISVs) and application solution providers (ASPs) to develop collaborative applications on the Microsoft's Exchange 2000 Server platform.

This agreement builds on Microsoft and Interliant's relationship established last year in October. The deal puts Interliant in a great position to capitalize on the success of Microsoft's Exchange 2000. It also cements Interliant's relationship with Microsoft and validates its collaborative application expertise in the ASP marketplace.

Bill Dering, C.E. Untberg, Towbin analyst, said the Microsoft investment affirms Interliant's leadership in the ASP marketplace.

"The Microsoft investment in Interliant only highlights and confirms the direction the two vendors have been moving the past few months," Dering said. "It formally endorses Interliant as a premiere choice to Microsoft network of VARs. It gives a strong overall signal that Microsoft thinks Interliant is one of the best ASPs in the market today."

Once viewed as a Lotus Notes Web caterer, Interliant steps to the forefront of the ASP hosting market segment. In recent months, Interliant has expanded its application offerings through key acquisitions, and negotiated strategic alliances with an impressive group of partners.

Early in March Interliant extended its ASP market leadership with the acquisitions of reSOURCE PARTNER, Inc and Soft Link, Inc. The strategic achievement landed Interliant at the plateau of hosted PeopleSoft, Inc.PeopleSoft applications by expanding its portfolio to include Enterprise Resource Planning (ERP) hosted solutions.

Dering said the PeopleSoft acquisition provides Interliant with an ERP solution to add to its ASP portfolio, which it did not previously have. Interestingly, rSP also has been doing some application hosting and, is more than just a PSFT implementor, but also a PSFT ASP.

"Interliant should benefit tremendously from reSOURCE PARTNER's pre-configured rapid implementation methodologies and pre-configured PSFT application templates, tables and codes which will enable Interliant to reduce a customer's time-to-market or time-to-benefit," Dering said.

Dering added that reSOURCE PARTNER has been providing some payroll outsourcing services, which makes the acquisition even more interesting when you consider an ASP providing an end-to-end, outsourced Human Resource solution. The acquisitions should add nearly $40 million in incremental revenues to Interliant in 2000.

Columbus-based reSOURCE PARTNER was acquired from Borden, Inc. and included a state-of-the-art data center in Ohio. By acquiring two established companies, Interliant bought itself a broad base of potential news customers and deep intellectual capital in the ERP space.

In February, Interliant won $27.5m backing from Dell Computer Corporation (DELL) , BMC Software, Inc. (BMCS) , and Network Solutions, Inc. (NSOL) . Already partnered with International Business Machine Corp.